Foreign Exchange
Assume that the exchange rate between country A and Country B a $1:$8.5. If Carl attempts to exchange his money from Country B to country A and he exchanges over $12,750, what would his currency be worth in Country A?
His money would be worth $1,500 in Country A
Asuming you are in a recessionary gap, using fiscal policy, how do you go back to equilibrium.
Reduce taxes, increase Gov. Spending
Tomas takes $1000 from under his mattress and deposits it into a newly opened checking account at good fourtune bank. The RR is 10%. How much money does the bank have to keep?
The bank is required to reserve at minimum $100
What is MPC and MPS
The Marginal propensity to consume and the Marginal propensity to save.
What was the Push up machine an example of?
Diminishing marginal return or diminishing marginal benefit
What would happen to the U.S dollar if Europeans prefer vacationing in the U.S? What would happen to the Euro?
U.S dollar appreciates and demand increases
The Euro depreciates and supply increases
If the government wants to change taxes appropriately to exactly close the gap, then it must take into account these.
What is the MPS and MPC.
If the FED buys $200K in government bonds and the rr is 20% with banks holding no excess reserves - how much is the possible change to the total money supply?
5x200K=$1,000,000
What is Foreign exchange?
Foreign exchange is the process of converting one currency into another.
What is the formula for the Quantity Theory of Money?
PQ = MV
Or
RGDP = MV
The financial flows recorded in the financial account are also part of this market
Loanable Funds Market
The goal of contractionary fiscal policy is to close this.
What is the recessionary gap?
Assuming that Ostermark Has a GDP of about $7 Octodecillion and a population of 3 billion people. What is their GDP per capita?
The average GDP is $2.3 quindecillion
What is the FED?
the FED is the central bank of the United States that manages the country's monetary policy and financial system
Why do Philips and aggregate demand graphs mirror images?
The LRAS and LRPC both represent Qfe but the Q of LRAS shows employment and the Q for LRPC shows unemployment
A limit on the quantity of imports allowed into a country
Quota
Contractionary monetary policy serves to close the inflationary gap through doing this.
What is decreasing the money supply.
When a bank makes a loan, it is exchanging "new" money for this.
What is an IOU?
What is Crowding out?
Crowding out is what happens when the Government invests more than private investors are able to.
The candy corn game helped explain the MPS and MPC as well as the circulation of money
When a foreign company buys business in a different country
When a foreign company buys business in a different country
As the money supply increases, this decreases.
What is the nominal interest rate?
When an individual cashes a check in a bank, these increase.
What are checkable deposits and reserves?
What is GDP per Captia?
GDP per capita is the wealth of every individual person in a given country spit up equally. Like a large Pizza
Explain (transmission?) how a Government improving infrastructure works to create economic growth.
Infrastructure (increased Gov Spending) can lower business costs, allowing increase AS and greater RGDP